Net Asset Value(s)

RNS Number : 9222R

Baker Steel Resources Trust Ltd

06 March 2019

 

BAKER STEEL RESOURCES TRUST LIMITED

(Incorporated in Guernsey with registered number 51576 under the provisions of The Companies (Guernsey) Law, 2008 as amended)

6 March 2019

28 February 2019 Unaudited NAV Statement

Net Asset Value

Baker Steel Resources Trust Limited (the "Company") announces its unaudited net asset value per share at 28 February 2019:

Net asset value per Ordinary Share: 57.4 pence

The NAV per share has decreased by 3.9% against the NAV at 31 January 2019 as previously reported, primarily due to a reduction in the valuation of the Futura Resources, explained below and the fall in the price of Metals Exploration PLC on the AIM market of the LSE.

The Company had a total of 116,139,980 Ordinary Shares in issue with a further 700,000 shares held in treasury as at 28 February 2019.

Portfolio Update

The Company's top 10 investments are as follows as a percentage of NAV:

Polymetal International Plc	29.0%
Futura Resources Ltd	13.7%
Bilboes Gold Limited	13.0%
Cemos Group plc	10.4%
Polar Acquisition Ltd	8.9%
Sarmin Minerals Exploration	5.0%
Black Pearl Limited Partnership	4.0%
Anglo Saxony Mining Limited	3.3%
Nussir ASA	3.2%
PRISM Diversified Ltd	3.0%
Other Investments	5.2%
Net Cash, Equivalents and Accruals	1.3%

Investment Update

Correction to Unaudited NAV for 31 December 2018

At each year end, the carrying value of the convertible loans in the portfolio is calculated taking into account estimated repayment risk and the value of the convertibility. The main factors in assessing the value of the convertibility are the share price, the exercise price, the time left to convert and the volatility of the shares. The assumed volatility for an unlisted convertible is based on the average of the volatilities of a basket of comparable listed shares. An error has been identified in the calculation of the volatility for Futura Resources Ltd at the 2018 year end. This occurred due to a share consolidation in one of the basket constituent companies which was not factored into the calculation, resulting in too high a volatility being used in assessing the value of the Futura convertible loan. This in turn led to the increase in Futura's carrying value being overstated. This error has now been corrected such that at 31 December 2018 the increase in the carrying value of Futura convertibles was 15% rather than the increase of 42% previously reported. This results in the unaudited December 2018 NAV being adjusted down 2.4% to 56.9 pence per share and the unaudited NAV for January 2019 being adjusted down 2.3% to 58.3 pence per share. This adjustment has been taken into account in the NAV at 28 February 2019 above.

Anglo Saxony Mining Limited ("ASM")

During January 2019, the Company made a follow-up investment in ASM, investing £1 million in convertible loan notes to take its investment to date to £2.2 million. The Company previously subscribed £200,000 in equity at the end of 2017 and £1 million in the first tranche of convertible loan notes in the second half 2018.

ASM's principal asset is the Tellerhauser tin project in Saxony, Germany which contains a mineral resource estimated under JORC 2012 guidelines of 18.9 million tonnes at a grade of 0.49% tin within the skarn packages for 93,000 tonnes of contained metal. A further 3.3 million tonnes at 0.34% tin is estimated within the schist sequences for an additional 11,000 tonnes of tin. The mineralisation also contains significant quantities of indium and zinc. ASM has also recently acquired the nearby Gottesburg project from TIN International which has a JORC resource of 114,000 tonnes of contained tin.

One of the attractions of Tellerhauser was the extensive work undertaken by the previous GDR/Soviet owners in the 1960s and 1970s, which included 65,000m of tunnels, 2 internal 400m shafts, and a 9km adit, and 141,342m of drilling in 2,112 boreholes. At the time of the Company's first investment in ASM, the principal uncertainty over the project was the mineral processing metallurgy and whether a saleable concentrate could be produced from the ore from the mine. This was the reasoning behind the phased investment in ASM with the initial £1.2 million invested in 2018 funding a pilot plant testwork programme in Freiberg, Germany and commercial testwork by ALS in Tasmania. The results of this testwork have demonstrated that the mineralisation can be successfully processed into a saleable tin concentrate and the Company therefore decided to invest the second £1 million tranche of the convertible loan in order to fund the pre-feasibility study into the project. On conversion of the convertible loan and interest, the Company would own approximately 24% of ASM. More information on ASM is available on its website www.anglosaxony.com.

Metals Exploration PLC ("Metals Ex")

On 18 February 2019, Metals Ex announced that it had agreed the conditional rescheduling of its US$63.3 million senior debt facility with the final repayment date extended to 31 December 2020. The main condition precedent is that Metals Ex is required to raise net equity proceeds of US$20 million by 21 March 2019 of which US$15 million will be used to immediately pay down the debt. No details have yet been received regarding the equity raising.

On 27 February 2019, Metals Ex announced the results of its review of historical performance data at the Runruno Mine in the Philippines. This review has highlighted a number of errors in previous statements and in particular that the historic statements had incorrectly referred to the BIOX® circuit having achieved and maintained 100% of design throughput rate for extended periods of 2018. It is the view of the new management and an independent third party review completed by a BIOX® specialist that the BIOX® circuit has yet to reach 100% of nameplate design throughput and, on average, only operated at 31% of design capacity during 2018. The key to the success of Metals Ex will be whether is it able to raise the requisite equity to satisfy its banks and whether the new management can achieve the recoveries and throughput from the processing plant.

Further details of the Company and its investments are available on the Company's website www.bakersteelresourcestrust.com 

Enquiries:

Baker Steel Resources Trust Limited                [phone]

Francis Johnstone
Trevor Steel

Numis Securities Limited                                   [phone]

David Benda (corporate)

James Glass (sales)

The Net Asset Value ("NAV") figure stated is based on unaudited estimated valuations of the underlying investments and not necessarily based on observable inputs. Such estimates are not subject to any independent verification or other due diligence and may not comply with generally accepted accounting practices or other generally accepted valuation principles. In addition, some estimated valuations are based on the latest available information which may relate to some time before the date set out above.

Accordingly, no reliance should be placed on such estimated valuations and they should only be taken as an indicative guide. Other risk factors which may be relevant to the NAV figure are set out in the Company's Prospectus dated 26 January 2015.

 

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